Stanford investors sue Caribbean banks to recoup losses

Investors caught up in the fall out from Allen Stanford's alleged $7bn
(£4.45bn) "Ponzi" scheme are attempting to sue a number of
Caribbean banks, the Caribbean financial regulator and the Antiguan
government to recover money they argue is rightfully theirs.

The Bank of Antigua was taken over by the Eastern Caribbean Central Bank and its assets redistributedPhoto: REUTERS

By James Quinn, US Business Editor

7:27PM GMT 17 Feb 2010

A small group of investors have filed a class-action lawsuit seeking compensation for the "unlawful seizure" of the Bank of Antigua.

The Bank of Antigua was owned by Stanford Financial Group, and was the vehicle through which the investors bought what they believed to be high-yielding certificates of deposit, which US prosecutors claimed are at the root of the alleged fraud.

Mr Stanford – he was stripped of his knighthood last year – was accused by US regulator the Securities and Exchange Commission (SEC) of working with colleagues to orchestrate the widespread fraud last February, since which time criminal charges have also been levelled against him.

The Bank of Antigua was taken over by the Eastern Caribbean Central Bank – the regulator for eight islands in the region – shortly after the allegations against Mr Stanford came to light, and the Bank of Antigua's assets were then distributed among the EECB's five member banks, including Antigua Commercial Bank and Eastern Caribbean Financial Holdings.

"The Bank of Antigua was, and remains, enormously valuable. All of that value rightfully belongs to Mr Stanford's victims," alleges lawyer Peter Morgenstern in the court filing.

Although the Bank of Antigua's exact worth is not known, the lawsuit, filed in Dallas, is claimed to have included loan receivables worth tens of millions of dollars. The suit's defendants have yet to respond.

Mr Stanford, who has consistently and publicly denied all charges against him, remains in a Houston federal detention facility awaiting trial next year.